F

Oil Prices and Inflation

in the Philippines in 2022

The year 2022 marked the return of more than US$100

per barrel price of oil (represented by Dubai crude oil
acts
price) in the world market (Figure 1) not seen since
in
igures
August 2014 (US$101.85/barrel) and corresponding
hikes in inflation rates across the globe, including the
Philippines.

Driven by growing demand due to the reopening of

economies from pandemic restrictions and the supply Congressional Policy and Budget Research Department
and logistics constraints brought by the ongoing Russia- House of Representatives
Ukraine war which started in February 2022, Dubai February 2023 (No. 10)
crude price reached its peak of US$115.73/b in June
2022. Upon breaching the hundred-dollar per barrel price
in March, Dubai crude stayed above that benchmark for oil prices as the country heavily imports its oil supply
five consecutive months till July with US$106.48 and from the Middle East (Table 1).
has eased gradually to US$76.78 by December, to pull
the annual average to US$97.05 in 2022. Domestically, the pump price of gasoline in the NCR
started at ₱66.36 per liter, increased to the maximum of
Within the year, the highest increase was posted in ₱83.85 in June, and fell again to ₱63.88 in December.
March 2022 when the price per barrel of Dubai crude For kerosene, the initial price for the year was at ₱54.53
reached US$113.1 compared to just US$64.0 or an per liter and gradually peaked at ₱87.01 in June before
increment of 76.9% year-on-year (Y-o-Y). On the other dropping down to ₱72.85 by year-end. With diesel, the
hand, the corresponding price in November rose by only price began at its lowest in 2022 with a monthly average
5.5%, thus maintaining the year’s average increase of of ₱51.15, reached its highest for the year in June at
42.9% ₱84.04, and dipped to ₱68.67 in December 2022. The
prices of the three oil products were highest at the same
Figure 1 time as the Dubai crude oil price was highest in June
Average Price of Dubai Crude Oil (USD/Barrel)
and Y-O-Y Price Change (2021 = 100, %), 2022.
January 2021- December 2022
Table 1
Dubai Crude Oil Price (USD/Barrel) and
115.73
113.11
108.32

Local Pump Prices in NCR (₱/Liter),

106.48
102.68

120 120%
January- December 2022
97.75

Change in Price (2021 = 100, %)

93.13
Dubai Crude Oil Price (US$/barrel)

90.63
90.59

Dubai Crude OIl Pump Prices (₱/liter)

86.28

100 100% Month

83.11
81.22
79.80

(US$ per barrel) Gasoline Kerosene Diesel

76.78
73.00

72.76
72.24
70.96

January 83.11 66.36 54.53 51.15

68.85
65.98

80 80%
63.95

76.9%
62.37
60.37

64.6% February 93.13 66.02 59.59 55.99

54.16

64.2% March 113.11 71.20 68.61 65.33

60 63.1%
60%
54.3% April 102.68 72.65 74.13 72.19
53.5%
45.9% May 108.32 77.89 77.59 76.10
40 40%
42.0% June 115.73 83.85 87.01 84.04
25.5% July 106.48 80.45 83.67 82.98
20 20% August 97.75 74.63 77.77 76.14
11.5%
8.1% September 90.63 72.98 80.51 78.75
5.5%
0%
0 October 90.59 69.65 78.40 78.17
November 86.28 69.82 79.61 75.87
December 76.78 63.88 72.85 68.67
Crude Oil Price (US$/barrel) Change in Price (%) Average 97.05 72.45 74.52 72.12
Source: World Bank’s Commodity Prices Source: World Bank’s Commodity Prices and Department of Energy (DOE)

The movement in the monthly average pump prices On average, the pump prices in the NCR in 2022
in the National Capital Region (NCR), Philippines in for gasoline and diesel hovered around P72.45 and
2022 generally paralleled the changes in Dubai crude ₱72.12 per liter, respectively. Note that gasoline
 prices were higher than diesel prices from January to However, diesel prices decreased the slowest in
May 2022 but were overtaken by the latter beginning Baguio City since peaking at ₱87.24 and registered
June up to December 2022. the smallest total price decrease of ₱15.05 from its
peak in June 2022.
Based on the monitoring of the DOE, pump prices
With oil products being used as input in almost all
in the NCR for 2022 were correspondingly adjusted
economic activities, increases in the prices of oil will
with a total of three to five times a month for gasoline
have significant and lagged effects on the prices of
and four to five times for kerosene and diesel. The
commodity groups that directly use oil, specifically
respective total increases (net of decreases) of the
on housing, water, electricity, gas, and other fuels
prices of gasoline, kerosene and diesel were ₱14.9,
(HWEGO); and transport (TRANSPO) (Table 3).
₱21.3 and ₱27.3.
Table 3
The movement of diesel prices in selected cities Dubai Crude Oil Price (US$/Barrel) and
outside the NCR, on the other hand, changed variably Y-O-Y Inflation Rates of Hwego and Transpo (%),
January-December 2022
. (Table 2). Y-o-Y Inflation Rate
Dubai Crude Oil
Month (2018 =100, %)
(US$ per barrel)
Table 2 HWEGO TRANSPO
Average Monthly Common Price of Diesel January 83.11 4.5 7.0
(₱/Liter) in Selected Cities Outside NCR:
January- December 2022 February 93.13 4.8 8.8
March 113.11 6.2 10.3
Month Baguio City Batangas City Cebu City Davao City April 102.68 6.9 13.0
January 53.39 52.16 53.25 50.99 May 108.32 6.5 14.6
February 58.73 55.15 57.48 55.69 June 115.73 6.6 17.1
March 68.01 59.22 69.22 65.59 July 106.48 5.7 18.1
April 75.21 71.98 75.21 72.07 August 97.75 6.8 14.6
May 78.88 74.84 79.68 75.49 September 90.63 7.3 14.5
June 87.24 86.26 90.21 85.54 October 90.59 7.4 12.5
July 83.46 80.58 85.18 80.77 November 86.28 6.9 12.3
August 76.48 76.14 79.15 75.69 December 76.78 7.0 11.7
September 79.43 74.69 80.73 75.75 Average 97.05 6.4 12.9
October 80.81 75.28 83.16 74.07 Source: World Bank’s Commodity Prices and PSA
November 81.39 72.44 81.17 74.36
December 72.19 65.19 71.03 66.37
Prior to the Ukraine-Russia war which aggravated
Average 75.22 70.18 76.90 71.20
global oil supply disruptions caused by the Covid-19
Source: DOE, averages derived based on weekly common/ range of prices
pandemic, inflation rates in the TRANSPORT AND
HWEGO sectors are already above the government
Considering diesel prices in some of the country’s target inflation of 2.0%-4.0%. Looking at the year-
major cities, consumers in Cebu City in the Visayas on-year price movements of the two commodity
paid more at ₱76.90 per liter on average compared groups, the TRANSPO sector recorded the highest
to consumers in the cities of Batangas, Davao and average inflation rate with 12.9% in 2022. The biggest
Baguio in 2022. Cebu City also registered the highest increases in price were registered in July 2022 at
price of ₱90.21/liter in June 2022 when the price of 18.1% followed by 17.1% in June, and 14.6% in May
Dubai Crude oil also peaked at US$115.73 per barrel. and August.

On the other hand, average inflation rate of the

Meanwhile, diesel prices were lowest in Batangas
City in Southern Luzon, registering an average of
₱70.18 per liter for the year 2022. Batangas City also
had the largest total price decrease worth ₱21.07 in
December 2022 from its peak of ₱86.26 in June 2022
compared to Baguio (₱15.05), Davao (₱19.17), and
Cebu (₱19.18). Unexpectedly, although Davao City
is the farthest from the country’s capital, Manila, the
average price of diesel at ₱71.2/liter was lower than in
Baguio and Cebu City.
HWEGO in 2022 was at 6.4% with the biggest price
increases recorded in October, September, and
December at 7.4%, 7.3%, and 7.0%, respectively.
Note, however, that while the inflation rate in the
TRANSPORT services sector has been following the
trend of the price of the Dubai crude oil, inflation in the
HWEGO continued to increase despite falling Dubai
crude prices since August 2022. This may indicate
other factors that influenced the prices of HWEGO.